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00:00PUBLIC -- IN AMERICAN PUBLIC POLICY STUDIES. HE COMES TO US TODAY FROM MOUNTAIN VIEW, CALIFORNIA. THANK YOU FOR BEING WITH US. WHETHER IT IS FISCAL OR MONETARY, IS THERE REASON TO BE CONCERNED WITH THE ECONOMY? WE WENT TO -- THROUGH THIS EXPERIENCE YESTERDAY WITH A RECORD LOW IN THE 30 YEAR. OUR BOND MARKETS TRYING TO TELL US SOMETHING? LANHEE: THE FUNNY THING ABOUT THE ECONOMY IS YOU CAN LOOK AT VARIOUS MEASURES AND DIVINE FRIEND KINDS OF CONCLUSIONS. THERE IS EVIDENCE TO SUGGEST THAT WHAT WE ARE SEEING IS SLOWING. THE QUESTION IS -- WHAT ARE THE APPROPRIATE INTERVENTIONS? WHAT IS THE RIGHT TIMING? THE WHITE HOUSE TALKING POTENTIALLY ABOUT PAYROLL TAX RELIEF. THAT IS A PRETTY SIGNIFICANT MEASURE, WERE THEY TO MOVE FORWARD WITH IT. THE REALITY IS YES, THERE IS SOME INDICATION OF SLOWING. THERE IS A QUESTION ABOUT TIMING AND THERE IS A QUESTION ABOUT WHAT THE RIGHT INTERVENTIONS ARE AT THIS STAGE. DAVID: IF YOU WERE WORRIED ABOUT THE ECONOMY, LET ' S GIVE YOU TWO ALTERNATIVES. ONE IS A FED RATE -- THE PRESIDENT SAID 100 BASIS POINTS WE NEED. THE OTHER IS A PAYROLL TAX CUT OR DEFERRAL. THERE ARE OTHER IDEAS, SUCH AS CUTTING CAPITAL GAIN AND ROLLING BACK TARIFFS. WHICH WILL BE MOST EFFECTIVE AT GENERATING MOVEMENT IN THE ECONOMY? DAVID: THE FIRST POINT I WOULD MAKE -- LANHEE: THE FIRST POINT I WOULD MAKE IT CERTAINTY. THE CHALLENGE WE HAVE WITH THE TARIFFS AND THE CREATION OF ECONOMIC POLICY IS NOT THE TARIFFS THEMSELVES. IT IS THE UNCERTAINTY CREATED BY THE ENVIRONMENT IN THE U.S.-CHINA CONVERSATION. THAT UNCERTAINTY IS PRODUCING SOME DRAG ON THE ECONOMY THAT IS PROBLEMATIC. I WOULD LOVE TO SEE US GET MORE CERTAINTY. SOME OF THAT WILL BE A POLITICAL PROCESS. I THINK THAT IS THE FIRST POINT. THE SECOND THING I WOULD SAY IS THE FED IS HESITANT PRECISELY BECAUSE THEY WANT TO BE ABLE TO HAVE TOOLS IN THEIR TOOLKIT TO GO TO IF THINGS DO TURN SOUTH. THAT SOUND YOU PLAYED AT BEGINNING OF THE INTERVIEW -- THE FED WANTS TO INTERVENE WITH THE FED HAS TO INTERVENE, WHICH MEANS THE THIRD OPTION WOULD BE LOOKING AT SOMETHING LIKE A PAYROLL TAX CUT INVOLVING CONGRESS MUST SOME ACTIVITY ON THE TAX SIDE TO BOOST CONSUMER CONFIDENCE. THAT WOULD HAVE AN IMMEDIATE EFFECT. THE CHALLENGE IS IT SENDS A STRONG SIGNAL ABOUT WHERE POLICYMAKERS THINK THE ECONOMY IS HEADED. THAT CREATES DANGER AND HAS RISK. DAVID: YOU REFERRED TO SLOWING. HOW MUCH OF THAT IS SLOWING

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Uncertainty Is a Drag on the Economy, Hoover’s Chen Says

Lanhee Chen, research fellow at the Hoover Institute who was the policy director for Mitt Romney’s 2012 presidential campaign, discusses the slowdown in the economy. He speaks with Bloomberg’s David Westin on “Bloomberg Markets: Balance of Power.” (Source: Bloomberg)

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